Things to Avoid Charging on a Credit Card
Many households have credit cards for everyday use, and some have them available for emergency situations. You must remember there are some purchases you should avoid charging on a credit card. This article will go over the top twelve things you should never buy on a credit card. It will also talk about the reason why they’re not a good idea.
12 Things You Should Avoid Charging on a Credit Card
1. Avoid Charging Household or Utility Bills
You budget carefully every month, but once in a while, there’s an unexpected bill or emergency. This unexpected expense or bill now leaves you short on money for your utility bills. If you have a credit card, it may be tempting to just pay your bill with that and worry about it later. Putting your leftover bills on your credit card is not a good idea. If you’re already short on money for the month, you won’t be able to make your credit card payment. The interest on your credit card will set you back farther in debt as well. You should only pay bills with a credit card if you can pay off the entire balance each month.
2. Avoid Charging Taxes
You get stuck with a large tax bill and don’t have the cash to pay it off right away. You might think it’s a good idea to put the rest on your credit card. If you do this, you’ll also owe a two to three percent convenience fee to whichever institution does your taxes. Combine this cost with the interest rate on your card; you’ll be paying a bigger bill than you originally owed.
3. Avoid Charging Mortgage Payments
You can put your mortgage payments onto your credit card only if you can pay the full amount off each month. If you know you can’t do this, but put it on your card anyway, you’re setting yourself up for financial disaster. Your mortgage interest rate is most likely lower than your credit card interest rate. If you’re struggling to keep up with your mortgage, you’re probably struggling with your credit card payments as well. Adding more debt to your credit card can cause your minimum payment to increase, which will put you farther behind.
4. Avoid Charging Medical Bills
If you don’t have insurance and get sick enough to go to the doctor, your medical bills will stack up quickly. If you put any medical bills on your credit card as a temporary fix, this can lead to a bigger headache. Along with your original medical bill, you’ll also be paying back interest on your credit card. This practice will cause you to pay back more than what you originally owed. There are medical lines of credit where no interest will accrue for six months or more.
5. Avoid Charging Vacations
You want to go on vacation but don’t have the money to go. So you’re going to charge it as credit. Charging a holiday on credit is a wrong choice because you can lose track of how much you spend. Once you get back and get your credit card bill, you could be in for a nasty surprise. Charging a vacation can get you into a financial hole you have trouble digging out.
6. Avoid Taking Out Cash Advances
A cash advance is a loan you borrow against your credit card. There are times that you simply don’t have a choice and have to do this, it shouldn’t become a habit. You will end up paying interest that is two to three percent higher than your credit card’s interest. You could also find yourself paying a transaction fee on each purchase.
7. Avoid Charging Down Payments
If you can’t afford a down payment on something, charging it isn’t a good idea. You have to remember that you should be paying your credit card bill off each month. If you can’t do this and charge a down payment to your card, you’re going to get stuck. You will also be stuck with higher interest rates, on top of the amount you owe for the down payment.
8. Avoid Charging Many Small Purchases
If you put each small purchase you make on your credit card, you could be heading for a problem. Those little purchases are a fast for your credit card debt to grow out of your control. Some stores also charge a convenience fee with every purchase under $5. The higher you rack up your credit card debt, the higher the minimum payment goes as well. If you are looking to earn credit card rewards and pay off your balances in full each month then using a credit card to make small purchases can be a smart decision.
9. Avoid Charging College Tuition
Tuition is expensive, and you might want to charge it to cover the cost, but this can lead to disaster. You should think about the added convenience fees, which can run to 3 percent or higher. There is also interest and late fees you will have to worry about if you charge your tuition costs. Many colleges add on a percentage to your existing debt as their fee as well.
10. Avoid Charging Weddings and Honeymoons
You should never purchase your wedding or honeymoon on your credit card. Charging these things will set up your marriage up for stress until the balance is paid off. Charging and not keeping track of your spending is also a way for your balance to get out of control. You won’t realize how much you’ve charged until you get the bill, and it could be astronomical. Having a high balance will also cause your minimum payments to go up, and you’ll be paying interest as well.
11. Avoid Charging a Bar Tab
If you go out to have fun, a credit card offers a convenient way to pay your tab. You should never pay your bar tab with a credit card. After a night of drinking, you might not realize how much you spent. If you add tipping the bartender and buying rounds into the mix, this makes for an expensive night. If you go out and drink several nights a week, you can quickly dig yourself into a financial hole. You may not be able to pay the full amount off at the end of the month. There is also interest to consider and possible late fees as well.
12. Avoid Charging a Car
You should never purchase a car on your credit card. Doing this can quickly make you max out any card you use for this purpose. It may be tempting to do since many credit cards offer perks for hitting a certain dollar amount. However, your credit card will add on interest fees, and they are usually more than a car loans are. Charging a car to your card can also cause you to miss a payment, and this can damage your credit.
If you have a credit card, think about it before you charge things. You will have to pay it back, along with interest. There are alternative options available that are less expensive. This article has listed twelve things to avoid when you go to charge to your credit card. If you avoid these, you will have a better chance of staying on top of your credit.
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